Access to data to spur innovations in smallholder finance in Uganda

Apr 16, 2018 |

Our reporter

The fourth Fintech4AG event that brings together stakeholders from agriculture, finance and technology sectors to discuss major trends at the intersection of agricultural finance and technology took place last Friday at Fairway Hotel in Kampala.

The quarterly event was hosted by CGAP, UNCDF MM4P and Laboremus Uganda.

The initiative seeks to create synergies to extend financial services to farmers in Uganda many of which do not have access to credit, savings, money transfers and insurance today.

Smallholder families constitute the single largest client group by livelihood living under less than $2 a day. Financial inclusion is constrained by the perceived risk of the agriculture sector and a lack of data that could help mitigate the risks associated with Agriculture.

Without the information needed to identify high potential customers, financial institutions are unable to make lending decisions at scale. By leveraging alternative data, financial service providers [FSPs] will be able to reach millions of smallholders at scale and low cost.

At the event the “Smallholder Families Data Hub” developed by CGAP was launched.

The CGAP data hub provides resources for stakeholders interested in developing financial products and services with a focus on smallholder farmers across several markets in Africa.

Mr. Nathan Were, the smallholder finance lead for Uganda, indicated that “this tool will help providers identify new opportunities to serve the large and diverse market in Uganda whose financial lives are often little understood”.

Mr. Were added that “Smallholder families make up one of the largest potential markets for financial services in many developing countries, but reliable data on their financial and agricultural lives are scarce. Through simple, interactive data visualizations, the CGAP Smallholder Families Data Hub puts at providers’ fingertips more than 300,000 data points from CGAP’s demand-side smallholder research, enabling them to look for promising business opportunities to develop products and serve these families”.

“This data show smallholder families in a new light and illuminate potential opportunities for providers to better serve their needs for financial solutions. For us at CGAP, they reinforce the diversity and importance of smallholder households to financial inclusion, highlighting the presence of young people, women, small- and medium-sized business owners and casual workers in this pivotal client group,” said Jamie Anderson, a senior financial sector specialist at CGAP who focuses on smallholder households.

At the event the newest technical innovations in the agriculture and finance space, such as WeFarm, TruTrade, Geo Gecko and FIT Insight Limited after the symposium.

With over 100 participants, this regular event plays an important role in solidifying the importance of agricultural finance in Uganda, which will eventually play an important role in improving the livelihoods of millions of Ugandans living in rural areas. One example is “Emata”, an innovative app developed by Laboremus Uganda in cooperation with UNCDF MM4P.

The app allows dairy cooperatives to improve their administration and transparency, but at the same time it collects valuable data on farmers that can be used to provide them with micro-credit as well as a number of other services. This in turn benefits the cooperatives and the milk sector as a whole since farmers have access to more capital to boost their productivity.

“Emata is unique in the sense that it provides much needed digitisation of cooperative records, but at the same time it gives milk farmers a credit history based on which further financial services can be provided,” says Timothy Musoke, Head of Technology at Laboremus.

“While we wait for the commercial banks to reach the remote rural areas, it is important to work through existing structures such as SACCOs and Cooperatives, and improve their management and organisation from the bottom up. Technology can make this possible”, he adds.